01/09/2012 10:32 EST | Updated 03/10/2012 05:12 EST

Goldcorp expects to produce 2.6M ounces of gold in 2012, spend US$2.6 billion

Goldcorp Inc. (TSX:G) expects to produce 2.6 million ounces of gold in 2012, about four per cent more than last year as it starts seeing output from its Pueblo Viejo joint venture in the Dominican Republic.

The Canadian gold miner said Monday it produced 2.51 million ounces in 2011 from its mines around the world.

"Our forecast gold production of 2.6 million ounces in 2012 will be driven by another strong year throughout the portfolio," Goldcorp president and chief executive Chuck Jeannes said.

Goldcorp said it expects significantly increased production at its Penasquito mine in Mexico, offset by lower production at its Marlin mine in Guatemala as it moves to 100 per cent underground mining.

"Year over year growth in our overall production target comes from new gold production from the Pueblo Viejo joint venture in the Dominican Republic but at a significantly reduced level due to previously reported project delays. Consistent production levels at other mines throughout the portfolio will create a stable foundation for the years ahead," Jeannes said.

Goldcorp, which reports in U.S. currency, said the production for 2012 will come at a total cash cost of $250 to $275 per ounce on a by-product basis and $550 to $600 per ounce on a co-product basis.

Total cash costs for 2011 are expected to be roughly $220 per ounce of gold on a by-product basis and $530 per ounce of gold on a co-product basis.

The company has budgeted $2.6 billion in 2012 for capital spending with about 60 per cent allocated to projects and 40 per cent for operations.

Major project spending for the year includes $500 million at Cerro Negro in Argentina, $400 million at Eleonore in Quebec, $350 million at Pueblo Viejo in Dominican Republic, and $185 million at El Morro in Chile.

RBC Capital Markets analyst Stephen Walker rated Goldcop an "outperform" with "average risk."

"While 2012 costs were high than our estimates, in part due to our higher by-product commodity assumptions, we are fine with the forecast production growth over the next two years," Walker wrote in a note to clients.

Goldcorp, which has several projects in development and set to come into production over the next couple of years, said it expects to be producing 4.2 million ounces of gold per year by 2016.

Major rains and forest fires forced the gold miner to cut its 2011 production guidance last year as its Penasquito mine in Mexico saw lower processing rates, slower than expected progress on a dam and supplier issues, and part of its Pueblo Viejo project suffered significant damage due to major rainfall.

In July, Goldcorp temporarily stopped operations and evacuated most of the 380 employees from its Musselwhite gold mine in northwestern Ontario due to forest fires sweeping through the region.

Last month, the company said an amended environmental impact assessment was approved for the development and construction of its Cerro Nego mine on the Patagonian plains in Argentina.

The permit was a key step in moving the project to full construction.

Goldcorp has mines as well as exploration and development projects in Canada, the United States, Mexico and Guatemala and Argentina. The company employs more than 14,000 people.

The company boosted its monthly dividend in December to 4.5 cents per share to bring its annual payment to shareholders to a total of 54 cents per share.

Shares in Goldcorp were up 71 cents to C$45.91 in trading on the Toronto Stock Exchange.